Making sense out of the recent stock market activity is a challenge, to say the least. Our society has become so complacent that we rely upon the latest stock market tips from CNBC instead of doing our own market research. Some investors consider ‘sound bites’ from these sources as sufficient market research, and maybe that explains why the market is so sporadic. On any given day, you will hear conflicting views for predicting stock market activity on the same stock. Take the opinion of four ‘talking heads’, all disagreeing on the same stock, and flip a coin as to who is correct. One authority insists the growing earnings will cause the price to move up, while the other is adamant the stock has hit its peak and is already overpriced. Is it any wonder we sit mesmerized in front of our stock screens in a state of suspended animation? Even the experts cannot agree on the explanation behind the recent stock market activity.
No one can predict with any certainty when the Bulls will take over (or vice versa). There is but one certainty, eventually, all trends will change direction. This causes many investors to sit on the sidelines to wait for more predictable stock market activity. While this is an understandable emotion, it is not going to allow you to build any profits. Investors need to take advantage of human emotions behind the uncertain stock market activity.
Fear and greed are the main emotional drives behind any stock market activity. This type of emotional investing often results in bad decision-making, and the ultimate demise of many investment portfolios. The emotional investor may pull out of strong Bear market activity, only to miss out on the early stages of a recovery where the biggest gains may be recorded. Sadly, many investors allow fear and greed to propel them into exactly the wrong moves during any stock market activity.
We are uncertain exactly when a trend will end or begin. But, one thing that can be said with certainty is that sitting on the sidelines, until one understands the rationale behind recent stock market activity, is not a proven stock market investing strategy.
Stay invested! Learn to read investor emotions that are clearly illustrated in Japanese Candlesticks. Use the uncertainty of the recent stock market activity to your advantage. Stay disciplined by trading the candlestick signals and stop falling prey to your emotions.
If you are waiting for more predictable stock market activity, you may be waiting for a long, long time. There are too many factors contributing to the sporadic activity behind the market. The war in Iraq, the possibility of a housing bubble, the increasing budget deficit, and continued oil rises. This doesn’t mean you should avoid beginning investing in the stock market. But, it does mean you better know what you are doing. The stock market will provide you with excellent returns if you will take the time to educate yourself. Pull yourself away from the television and take charge of your own investment decisions.
Utilize the information that is built into candlestick signals. The signals provide valuable stock market information. No matter what the rhetoric is being verbalized on the investment stations, the signals reveal exactly what investor sentiment is doing. This makes candlestick analysis very easy. The Japanese Rice traders have spent centuries of surveying high probability reversal signals. Identifying the signals at the tops or bottoms of major trends provides a very valuable advantage. Investors that understand candlestick technical analysis can immediately start taking action.
The appearance of a candlestick reversal signal produces a high probability situation. It also aids an investor to understand how to utilize investor sentiment to analyze what the market trends are doing. This permits an investor to better understand how the markets work. The common-sense that is built into candlestick evaluation enhances the ability to move portfolio positioning in the proper direction. Candlestick chart analysis is not a hard process to learn. Learning the important candlestick reversal signals, the 12 major candlestick signals, produces a market evaluation process that investors will utilize for the rest of their investment career. Take the time to understand what is being conveyed with the appearance of candlestick reversal signals. It provides an extremely important format for investing in any trading market.
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